If a Firm Has a Cash Cycle of 71 Days

question 108

Multiple Choice

If a firm has a cash cycle of 71 days and an operating cycle of 139 days, what is its average payment period?

• A) 210 days
• B) 68 days
• C) 53 days
• D) 41 days

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Definitions:

Direct Labor-Hours

A measure of the total hours worked directly on the production of goods.

Budget Variances

The difference between budgeted and actual figures for revenues or expenditures, indicating under or overspending.

Underapplied

A situation where the allocated manufacturing overhead costs are less than the actual overhead costs incurred, leading to underestimation of product costs.

Overapplied

A condition where the allocated amount of indirect costs exceeds the actual amount incurred.